Case in Point:Lessons for the proactive manager

January 2009
Vol. 1 No. 1

Quotable...

"Contemplating any business act, an employee should ask himself whether he would be willing to see it immediately described by an informed and critical reporter on the front page of his local paper, there to be read by his spouse, children, and friends."

Welcome to the first edition of our monthly e-mail newsletter designed to quickly inform and educate you on the latest happenings with respect to internal control and compliance issues within higher education.

Part of our mission in internal auditing is to promote a control conscious, proactive risk management environment. We believe learning from the control and compliance failures at other institutions can aid this mission and help you better anticipate and proactively manage your risks here at Auburn University.

Each month we will present information from news stories, publications, conferences, personal and organizational networks, etc. to help you stay aware of what is happening at institutions across the country. We will attempt to provide a hypertext link to the source of the information where possible. As you scan these items we suggest that you ask yourself this one question:
"What can I do to prevent this from occurring here?"

If you have any suggestions, questions or feedback, please e-mail me at robinmk@auburn.edu. We hope you find this information useful and would appreciate hearing your thoughts. We encourage you to forward this email to your direct reports, colleagues, employees or others who might find it of value.

If you have any suggestions for items to include in future newsletters, please e-mail Robert Gottesman at gotterw@auburn.edu.

Dec. 31, 2008: Ohio State University has notified 18,000 current and former students that their personel information was mistakenly stored on a computer server exposed to the Internet. The data included student names, Social Security numbers, addresses and coverage dates for those enrolled in the health insurance plan for three quarters in 2005-06. (link: http://www.studentlife.osu.edu/dataexposure)

Dec. 15, 2008: A breach of the accounting computer systems at UNC-Greensboro may have exposed personal employee information to intruders. The breach was detected on a computer in the Accounting Services office, in the form of a virus that may have allowed unauthorized access.
(link: http://www.uncg.edu/ure/news/stories/2008/dec/Security121508.htm)

Misapproriation/Fraud/Ethics Events

Jan 10, 2009: A six-month jail sentence, probation and a quarter-million dollars in restitution appears to have wrapped up the case of former Ithaca College employee Wendy Travis, who was convicted of using her position to steal hundreds of thousands of dollars from the college over a nearly seven-year period. (link: http://www.theithacajournal.com/article/20090110/NEWS01/901100348)

Jan 7, 2009: A West Virginia judge has ordered West Virginia University to pay attorneys fees and costs incurred by the Pittsburgh Post-Gazette when it sued the university under the state's open records law last year. A Dec. 21, 2007, story by the Post-Gazette questioned how WVU retroactively awarded a degree to the Governor's daughter (Heather Bresch) even though school records showed she had completed only about half of the required credits. WVU rescinded the degree in April after an independent panel concluded that the university falsified Ms. Bresch's transcript by adding courses she did not register for, pay for, or complete. The scandal led to the resignations of WVU President Michael Garrison, Provost Gerald Lang and business school Dean R. Stephen Sears.(link: http://www.post-gazette.com/pg/09007/940012-85.stm)

Jan 6, 2009: A former University of California Davis employee on Tuesday was sentenced to serve one year in prison and pay $128,681 for stealing $160,000 from the federal Food Stamp Nutrition Education Program. A federal grand jury indicted Benford in March 2007 on the one count of theft of government property. At the time, federal prosecutors alleged that Benford made fraudulent purchases and travel expense claims over a period of at least six years, going back to at least July 2000. The alleged misappropriation of funds was initially reported to UC Davis officials in August 2006, as a whistleblower complaint. When a campus investigation found that U.S. Department of Agriculture funds possibly were involved, university officials reported their findings to the federal government, and the USDA subsequently launched its own investigation. (link: http://www.bizjournals.com/sacramento/stories/2009/01/05/daily23.html)

Jan 5, 2009: A former Northeast Mississippi Community College employee has been indicted on five counts of embezzlement. Following a state auditor's investigation, Seleta Howell, who worked as an accounts receivable specialist, has been accused of embezzling nearly $60,000 from the school between August 2004 and September 2006.(link: http://www.clarionledger.com/article/20090105/NEWS/90105034)

Dec. 26, 2008: Scientific research is sometimes tedious, often exciting and, in some cases, not exactly ethical. A case in point: prominent psychiatrist and strong proponent of anti-depressants, Charles B. Nemeroff, M.D., was recently discovered to have accepted $800,000 from drug giant GlaxoSmithKline, a fact he failed to disclose. Emory University learned of this violation of basic research ethics and took away Nemeroff's prestigious department chairmanship (link: http://www.naturalnews.com/025171.html)

Dec. 15, 2008: Robert Felner, a nationally known educator and founding director of University of Rhode Island's School of Education, was indicted Oct. 22 in Louisville, Ky., on charges including mail fraud, conspiracy to embezzle and income tax evasion. According to the federal indictment, Felner, 58, diverted $1.7 million from a respected education research center he had established at URI. The fraud began while Felner was at URI and continued after he became dean of education at the University of Louisville in 2003, federal authorities say. (link: http://www.projo.com/education/content/felner_update_12-15-08_ICCJS75_v49.34ba70f.html)

Compliance/Regulatory Failure Events

Jan. 9, 2009: A federal appeals court ordered two Ohio University administrators to stand trial to defend their 2006 decision to strip the "graduate faculty" status from an engineering professor for his alleged role in a major plagiarism controversy. The U.S. Court of Appeals for the Sixth Circuit, overturning a lower court's decision, ruled that the university's provost and engineering dean should have granted Jay Gunasekera a public hearing before punishing him, and that the failure to give him one gave him legitimate grounds challenge their decision to strip him of graduate faculty status. (Link: http://www.insidehighered.com/news/2009/01/09/ohio)

Jan. 1, 2009: A University of Michigan professor and law student at the center of an alleged money-for-sex case received deferred sentences and were ordered to pay more than $1,000 in court fines and costs. The student told police she had been advertising sex acts online, and that the professor had paid her $300. While the two did not have intercourse, she told police, they engaged in other sex acts.(Link: http://www.mlive.com/news/ann-arbor/index.ssf/2009/01/um_prof_law_student_fined_in_s.html)

Dec. 23, 2008: Yale University has agreed to pay $7.6 million to resolve allegations that it broke the law by mismanaging federally funded research grants, federal authorities announced Tuesday.The civil settlement with the government resolves allegations that some Yale researchers at times charged a federal grant account for costs unrelated to grant objectives. The government also alleged the researchers wrongfully charged 100 percent of their summer activity to grants when the researchers spent significant time on unrelated work. (link: http://www.google.com/hostednews/ap/article/ALeqM5grUUNU5-RvAUxCkmXctg_DOwXm3wD958LJB00)

Dec. 22, 2008: Florida Gulf Coast University fired an adjunct German language and literature professor last week following an internal sexual harassment investigation that determined he had inappropriate physical contact with a 28-year-old female graduate student. This year, the university settled three discrimination lawsuits for $4.85 million, including a $3.4 million payout to two former female coaches who had alleged retaliation for reporting gender equity problems. (link: http://www.naplesnews.com/news/2008/dec/22/fgcu-instructor-fired-following-sexual-harassment-/)